ERA: Members Will Be Ejected for Selling Counterfeit Products

LAS VEGAS - The Electronic Retailing Association is cracking down on members who engage in the sale of counterfeit products, according to new guidelines from the organization that represents the interests of television and online retailers.

Any ERA member who is found to have engaged in the sale of a counterfeit product will have its membership terminated. That much was made clear at the ERA's annual show this week in Las Vegas.

Recognizing the seriousness of international counterfeiting, the ERA charged its Counterfeiting Task Force - led by Linda Goldstein, a partner at Manatt and Jorge Hane, president/CEO of Premier Solutions - with developing guidelines to resolve counterfeiting issues between members.

"Counterfeiting involves luring in consumers and persuading them to buy a product because of the well-known trademark, and generally also with packaging and product design elements that look like they come from the true manufacturer and owner of the trademark…giving those consumers an inferior product," said Greg Sater, an attorney at Los Angeles law firm Rutter, Hobbs and Davidoff Inc., and member of the Counterfeiting Task Force.

The International Chamber of Commerce estimates 7 percent of world trade includes counterfeit goods, with a value of $350 billion. The Department of Commerce estimates the loss to U.S. businesses from the sale of counterfeit goods to be in the region of $200 billion annually.

Under the guidelines, members can report their fellow members who are believed to being engaged in the sale of counterfeit products to the ERA. The ERA will refer the matter to the American Arbitration Association, which will provide an independent fact finder to solicit evidence from both parties.

The AAA will issue a report within 60 days with a conclusion stating if the accused ERA member was, in fact, selling counterfeit goods. The report will have no legal impact outside the ERA, although it can be used if subpoenaed in a legal case.

Participation in the fact-finding program will be mandatory for all ERA members, and if a company is ejected from the ERA as a result of the program, none of its principals may rejoin the ERA for a one-year period under another name.

If the company continues to sell counterfeits during that one-year period, the expulsion will be extended to three years.

"While expulsion may seem a harsh punishment, the ERA recognizes counterfeiting is a serious matter, which no ERA member should be involved with," Mr. Sater said.

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